Ripple Labs sued by Australian bank payments consortium over ‘PayID’ brand

Last modified August 26, 2020. Published August 26, 2020.

Fintech Ripple Labs is facing a lawsuit from a consortium of Australian banks alleging misuse of a trademark for payment services, potentially hobbling the U.S. startup’s expansion throughout the continent.

A federal judge in Australia allowed consortium New Payments Platform Australia, jointly owned by 13 banks including and , to move forward with its case against Ripple in a court order filed Tuesday. The case was made public with the filing of the order.

NPP, which is also part-owned by the Group, Australia’s second-largest bank by assets, and the country’s central bank, alleged that Ripple created confusion in the market through the launch of its PayID-branded service.

Financial partners of the consortium “appear to have assumed, incorrectly,” that the new service was part of NPP’s payments network, according to court filings. NPP uses the same name for services.

“I am of the view that Ripple ... is using the trademark ‘PayID’ as a badge of origin, to distinguish its ‘PayID’ branded electronic payment services from the electronic payment services from those of other traders,” said John Collins, a partner at Australian law firm Clayton Utz, which is representing NPP. 

“I am further of the view that Ripple has used the ‘PayID’ trademark in Australia, because of its partnership with three Australian companies … who in turn have advertised and promoted the Ripple Pay ID-branded service to their Australian customers.”

NPP was founded in 2014 to develop the New Payments Platform, a national payments infrastructure for Australia. The platform allows customers of deposit-taking institutions to send and receive real-time payments 24 hours a day, 7 days a week.

The consortium trademarked PayID in March 2017 under class 36 of the trademarks register, which applies to electronic payments and financial database services. Today, PayID is used to identify its addressing service and account proxies and aliases that form part of the Addressing Service, according to the court order.

Clients can create a PayID with their bank as an address for their NPPA payments and link that ID with their bank account. This allows payments directed to a PayID to be routed to its associated account at a financial institution.

NPP launched PayID in February 2018 and spent AUD 3.3 million ($2.38 million) to promote it across the country. Today, there are over 5 million PayIDs registered by Australian consumers across over 90 participating financial institutions, NPPA CEO Adrian Lovney testified. 

As of Aug. 3, PayID comprises just under 10% of the platform’s total payments, or roughly 1 million payments per week, with the larger NPP platform now showing signs of rapid growth in new users amid the COVID-19 pandemic, according to court filings.

Lovney said he became aware that Ripple was using the PayID brand on June 19, when the consortium’s general counsel alerted him to the launch, which also formed the so-called Open Payments Coalition.

Ripple’s PayID launched June 18, alongside fellow fintechs such as , and that make up the coalition of 40-plus companies, with the goal of streamlining cross-border payments. The product allows consumers to send and receive money using an “easy-to-read” address in place of a cumbersome bank account number.

“This is the first step in creating a truly open payments network,” the companies said in June. “PayID was built for all — it’s open-source, free and simple to integrate with the security and privacy that everyone from large financial institutions and global nonprofits, to ride-hailing apps and neobanks require.”

The 40-member coalition of companies also includes three Australian companies: FlashFX, BTC Markets and Independent Reserve. Collins said he contacted each of Ripple’s Australian partners and concluded that the firms were not aware that Ripple’s product was not associated with NPP’s. 

“It is clear to me that Ripple is targeting Australian consumers, including by partnering with three Australian companies in order to advertise, promote and offer electronic payment services offered by Ripple under the mark ‘PayID,’” Collins said.